Etail and retail reference price effects

Purpose The focus and intended contribution of this research are to understand better how retailers should strategically present external reference price information varying in the context from which it originates online vs bricks and mortar. Designmethodologyapproach A two reference price environment online etail, bricksandmortar retail two external reference price 252.99, low 379.99, high between subjects experimental design with a single control condition was employed. Findings Results from an experimental study provide empirical support, suggesting that consumers expect to pay less in online etail settings than bricksandmortar retail settings. Additionally, results suggest that bricksandmortar retail external reference prices influence consumer etail price expectations, price fairness, and satisfaction perceptions more than online etail external reference prices when reference prices are high. When external reference prices are low, both online etail and bricksandmortar retail external reference prices are equally effective. Research limitationsimplications Price setters should use bricksandmortar external reference prices when the external reference price is high, as consumers are impacted positively by these reference prices. Practical implications The research results suggest a time to use bricksandmortar external reference prices and suggest that online external reference prices have similar impact regardless of the size of the external reference price. Originalityvalue This research is the first of its kind to evaluate the impact of the context of the reference price on consumer evaluations.